Napocor, Meralco, mull scheme to reduce power rates

The National Power Corp. (Napocor) and the Manila Electric Co. (Meralco) are expected to draw up more programs that would further bring down power rates particularly in the industrial sector.

"Napocor and Meralco could think of other agreements or another program on rate schedule that would allow them to offer savings to their big customers," Energy Secretary Raphael Lotilla told reporters during the signing of the Power of Choice program of Napocor and Meralco Friday night.

Lotilla said the Power of Choice program is just an initial undertaking and could lead to an opportunity for both power firms to develop similar power reduction schemes that would put the electricity rates particularly in the industrial sector, at par with

other countries in the region. So far, the country has the third highest power rate in Asia.

"There are some customers who are still not covered by the Power of Choice program. Napocor and Meralco may think of way for pricing to go beyond the time-of-use (TOU) rates," he said.

The program was a culmination of the offer made by Meralco in March 2006, through a letter to President Arroyo, to unconditionally allow its large industrial and commercial customers with a demand of at least one MW, the choice of determining their own suppliers, and thus avail of TOU rates of Napocor or the blended rate of Meralco.

According to Lotilla, there is still room for these two power companies to bring down further their power rates.

"We are encouraging them if possible they could still look at ways to benefit those customers that are not directly connected to Napocor,"he said.

Lotilla noted that the Power of Choice program is seen to bring down rates to about 44 centavos per kilowatthour.

The energy secretary said this program is consistent with the goal of President Arroyo in her State-of-the-Nation Address (SONA) to reduce power cost in the industrial sector. "This program will also make the system more efficient," he said.

Based on the memorandum of agreement (MOA) signed over the weekend by Napocor and Meralco, the Power of Choice program will last only for one year. Thus, the need for the government to encourage Napocor and Meralco to come up with similar schemes in the future.

The energy chief also said the industries and establishments benefiting from the Power of Choice may be able to pass on the savings to their end-consumers.

"If they would be able to reduce their overhead, it may be passed on lower rates to end-users," he said.

He said this program, which aims to benefit customers with one megawatt (MW) demand, is also one of government‚s measures to alleviate the impact of the peso depreciation to exporters.

"This may soften the impact of peso appreciation to the export sector. This is a win-win thing," he said.

Meralco president Jesus Francisco said they expect to submit a joint application with Napocor for the approval of the said program with the Energy Regulatory Commission (ERC).

Francisco said while waiting for the ERC approval, they would start accepting applications from interested parties.

He said entities or industries that are operating 24 hours a day like the semi-conductor businesses, hospitals and hotels may avail of the program.